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India Week Ahead - 19th - 25th March 2012

|Includes: EEM, EPI, India Fund (IFN)

Last week the Indian markets moved down 1.2 %, the volatility was there due to multiple events happening. The RBI decided to keep the rates stable post a 75 basis point cut in CRR a week back to take care of the liquidity situation. The Railway budget was bold and good but is mired in political controversy. Good economics is never good politics. The Union budget proposal too has been on expected grounds and politics came in the way of reducing the fiscal deficit. The FRBM target of 3 % is a pipe dream now. Hope these type of politics will not drive the country into chaos like in Greece at a later stage. The Market did not like the union budget and have given thumbs down. We can expect some more correction coming in soon.

This week the India market will continue to analyze the budget and the political situation. The global cues will be closely watched too. The FII's have been net buyers; they don't seem to have sold into the market on budget day. This means, the FII's may arrest the fall around the 5200 - 5080 levels before fresh buying comes in. The India story is robust with a 7 % growth projected. The profit margin will be eroded with the rising inflation.

The derivatives position for the week stands at Rs 138531 Crs in OI; the PCR is at 1.08 the option IVs for Calls at 23 % & Puts at 24 %. The Nifty Future is trading at 20 point Premium to spot. The Technical & Derivative positions seem to suggest correction continuing into next week.

Nifty on 16th Mar: 5313

Nifty trading ideas for the week: Sell on an Up move to 5380 for a Target of 5200. SL: 5430

Stock ideas for the Week: Sell Sterlite around 115 levels Target: Rs 108 SL : 120

Trade safe